Appraisal myths debunked

By law, an appraiser must be state-licensed to perform appraisals for federally-related purchases. Also by law, you are entitled to demand a copy of the completed report from your lending agency. Contact Di Cicco & Associates if you have any concerns about the appraisal procedure.

Myth: Market value should be equivocal to the assessed value of the property.

Fact: This usually isn't true; most states do support the concept that the assessed value is the same as market value, but not always. There are times when interior remodeling has occurred and the assessor is has not investigated the improvement or other homes in the area have not been reassessed for quite a while, it may vary wildly.

Myth: Depending on whether the appraisal is provided for the buyer or the seller, the opinion of value of the property will vary.

Fact: There is no vested interest on the part of the appraiser in the outcome of the analysis, therefore he will complete his work with impartiality and independence, despite for whom the appraisal is written.

Myth: Market value will equal replacement cost.

Fact: Without any suggestion from any outside parties to purchase or sell, market value is what a willing buyer would pay an interested seller for a specific home. The dollar amount required to rebuild a house is what shows the replacement cost.

Myth: There are certain methods that appraisers use to show the value of a property, like the price per square foot.

Fact: Appraisers complete a comprehensive analysis of all factors pertaining to the worth of a property, including its location, condition, size, proximity to facilities and recent opinion of value of comparable homes.

Myth: As properties increase their worth by a certain percentage - in a strong economy - the houses around the appreciating properties are figured to increase by the same amount.

Fact: Worth appreciation of a certain home is always concluded on a case-by-case basis, factoring in data on comparable properties and other relevant elements. It doesn't matter if the economy is on the rise or declining.

Myth: Just seeing what the house looks like on its exterior gives a good idea of its worth.

Fact: To determine an accurate price beyond all doubt, an appraiser must inspect the house on a variety of factors based on location, condition, improvements, amenities, and current market trends. Obviously, none of these things can be derived just by viewing the house from the exterior.

Myth: Since the consumer is the party who provides the capital to pay for the appraisal report when applying for a loan for any real estate transaction, legally the appraisal report belongs to them.

Fact: Unless a lender releases its vestment in the document, it is legally owned by the lending agency that purchased the appraisal. By the Equal Credit Opportunity Act, any consumer requesting a copy of the document must be given one by their lender.

Myth: Consumers need not care about what is in their appraisal report so long as it meets the requirements of their lending agency.

Fact: Only if home buyers check out a copy of their report can they ensure its accuracy and possibly need to question the result. Remember, this is probably the most expensive and important investment a consumer will ever make. Also, the appraisal makes an excellent record for future reference, containing useful and often-revealing data - including the legal and physical description of the property, square footage measurements, list of comparable properties in the neighborhood, neighborhood description and a narrative of current real-estate activity and/or market trends in the area.